It’s often used to mean that people *intend* to do good things, but end up doing nothing beneficial – so it’s sort of used as a reminder to actually do good instead of just enjoying the idea or the intention of it.
But more commonly, it’s used to mean that good intentions can lead to people doing bad things. Almost nobody thinks that they’re a “bad guy.” Most of us will have an excuse for a bad choice that makes it seem good to us, or some reason why the bad thing we did isn’t so bad. Or that we meant well, but messed up somewhere along the way.
Many of the horrible, brutal leaders of history had intentions that, to them, were good – protecting their people, spreading their way of life, etc. – but which caused a lot of suffering or injustice in the world to the people that they were set against. No matter the intentions, it’s the action and the consequences that matter. That’s what that aphorism has always meant to me.
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